Italy has one of the most indebted governments in the world. It’s borrowed over $2.4 trillion, and its debt-to-GDP ratio is north of 130%. (For comparison, the US debt-to-GDP ratio is 104%.)

But the situation is actually much worse.

GDP measures a country’s economic output. However, it’s highly misleading. Mainstream economists count government spending as a positive when calculating GDP. A more honest approach would count government spending as a big negative.

In Italy, government spending accounts for a whopping 50%-plus of GDP. A more accurate debt-to-GDP ratio would exclude government spending from economic output. I suspect that figure would reveal the Italian government’s hopeless insolvency.

I don’t see how it’s possible for the Italian government to extract enough in taxes from the productive part of the economy to ever pay back what it’s borrowed.